Calculating VAT (Value Added Tax) seems at first glance to be a simple process. However, it turns out to be full of subtleties that require a thorough understanding for proper application. These subtleties include the calculation of VAT “within” (from the amount All taxes included (Net) to the Gross amount), i.e. the reverse VAT calculation. Below are the details for each rate.
The amount excluding taxes (Gross) represents the basis on which VAT is applied. This is the price of the goods or services before any taxes are added. This base includes various elements such as taxes (except VAT), ancillary costs charged by the supplier, and subsidies directly linked to the selling price. It is important to note that some items are excluded from this base, such as early payment discounts and rebates granted at the time of sale.
To calculate VAT, the calculations are as follows:
From Gross:
- VAT amount: Gross* VAT rate
- Amount including VAT (All Taxes included): Gross* (1+Rate)
From the Net:
- VAT amount: Net — Net/(1+rate)
- Amount excluding VAT: Net * (1+Rate)
From VAT:
- Amount excluding VAT: VAT/Rate
- Amount including VAT: VAT/Rate + VAT
Calculating 20% VAT involves:
From Gross:
- VAT amount: Gross* 0.2
- Amount including VAT (All Taxes included): Gross* 1.2
From the Net:
- VAT amount: Net — Net/1.2
- Amount excluding VAT: Net /1.2
From VAT:
- Amount excluding VAT: VAT/0.2
- Amount including VAT: VAT/0.2 + VAT
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To calculate VAT at a rate of 10%, the calculations are as follows:
From Gross:
- VAT amount: Gross * 0.1
- Amount including VAT (All taxes included): Gross * 1.1
From the Net:
- VAT amount: Net — Net /1.1
- Amount excluding VAT: Net/1.1
From VAT:
- Amount excluding VAT: VAT/0.1
- Amount including VAT: VAT/0.1 + VAT
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To calculate VAT at a rate of 5.5%, the calculations are as follows:
From Gross:
- VAT amount: Gross* 0.055
- Amount including VAT (All Taxes included): Gross * 1.055
From the Net:
- VAT amount: TTC — TTC/1.055
- Amount excluding VAT: TTC/1.055
From VAT:
- Amount excluding VAT: VAT/0.055
- Amount including VAT: VAT/0.055 + VAT
Need help? Test our European VAT calculation tool.
To calculate VAT at a rate of 8.5%, the calculations are as follows:
From Gross:
- VAT amount: Gross * 0.085
- Amount including VAT (All taxes included): Gross * 1.085
From the Net:
- VAT amount: Net — Net/1.085
- Amount excluding VAT: Net/1.085
From VAT:
- Amount excluding VAT: VAT/0.085
- Amount including VAT: VAT/0.085 + VAT
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The calculation of VAT at 2.1% implies:
From Gross:
- VAT amount: Gross * 0.021
- Amount including VAT (All taxes included): Gross * 1.021
From the Net:
- VAT amount: Net — TTC/1.021
- Amount excluding VAT: Net/1.021
From VAT:
- Amount excluding VAT: VAT/0.021
- Amount including VAT: VAT/0.021 + VAT
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